HERON THERAPEUTICS, INC. /DE/ (HRTX)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 net revenue was $38.213M (+16.5% YoY), with positive Adjusted EBITDA of $1.542M; diluted EPS was -$0.10 as net loss increased due to an $11.339M loss on debt extinguishment .
• Acute Care net revenue rose to $12.347M (+67.2% YoY) led by ZYNRELEF ($9.313M, +49% YoY) and APONVIE ($3.034M, +173% YoY); Oncology held steady at $25.866M with CINVANTI up ~6% YoY and SUSTOL down ~31% YoY .
• Against S&P Global consensus, revenue modestly missed ($38.21M actual vs $39.03M estimate) and EPS missed (-$0.10 actual vs -$0.013 estimate); management reaffirmed FY 2025 net revenue guidance of $153–$163M and Adjusted EBITDA of $9–$13M, while the call contained an inconsistent EBITDA range reference [*S&P Global estimates disclaimer].
• Key catalysts: permanent product-specific J-code for ZYNRELEF effective Oct 1, 2025, early October demand step-up, and momentum from the VAN device and dedicated APONVIE sales team; cash and short-term investments stood at $55.5M at quarter-end .

What Went Well and What Went Wrong

What Went Well

• Acute Care acceleration: ZYNRELEF net revenue grew 49% YoY and APONVIE grew 173% YoY; early October unit demand for ZYNRELEF stepped up ~17–18% MoM, signaling potential trend inflection .
• Commercial execution: CEO highlighted new initiatives (CrossLink Ignite, VAN, dedicated APONVIE team) “positively impacting our commercial execution and driving increased demand” .
• Reimbursement clarity: ZYNRELEF’s permanent product-specific J-code went live Oct 1, expected to streamline billing across CMS and commercial payers; NOPAIN Act adoption building, with management citing ~75% coverage of indicated procedures .

What Went Wrong

• Gross margin compression: product gross margin fell to 68.8% (from 71.2% in Q3’24) due to ~$1.4M in reserves/write-offs and higher unit costs; adjusted GM would be ~74.5% excluding one-time stocking charges per CFO .
• Bottom line impact: net loss widened to -$17.5M primarily from the $11.3M loss on debt extinguishment taken in the quarter .
• SUSTOL erosion: net revenue declined ~31% YoY and management plans a wind-down over the next 12 months ahead of a potential late-2027 reintroduction contingent on development/regulatory progress .

Financial Results

Core P&L metrics vs prior year and prior quarter

Segment breakdown (Net Revenue)

KPIs (adoption/penetration)

Quarterly trajectory (additional context)

Guidance Changes

Notes:

• CFO on the call stated “Adjusted EBITDA of $9M–$30M,” which appears inconsistent with the press release guidance of $9M–$13M; we anchor to the formal press release figures .

Earnings Call Themes & Trends

Management Commentary

• CEO: “We’re encouraged by the early signs that [new initiatives] are positively impacting our commercial execution and driving increased demand for our products.”
• COO: “The theme is friction removal and focus… VAN made prep easier… Ignite kept distributors focused on winnable accounts… permanent J-code clarity streamlining reimbursement.”
• CFO: “Product gross profit… was 68.8%… decreased from 71.2%… due to $1.4M in reserves/write-offs and ~$1.3M higher unit costs (supplier mix)… reaffirming net revenue of $153–$163M and Adjusted EBITDA of $9–$13M.”
• Development: “Pre-filled syringe… registration batches manufactured, stability initiated… if successful, approval anticipated in 2027.”

Q&A Highlights

• ZYNRELEF demand: Early October up ~17–18% MoM; management cautioned not to extrapolate a single month .
• Gross margin normalization: Excluding ~$2.2M stocking charge, GM ~74.5%, in line with recent quarters; CFO affirmed .
• Interest expense trajectory: Post-refinancing, net interest expense run-rate discussed around ~$2.5M going forward .
• APONVIE ramp/inventory: Minimal inventory stocking benefit from 200mg VAN; dedicated APONVIE team fully trained in October to support Q4 momentum .
• Policy tailwinds: NOPAIN Act adoption spreading to commercial payers (e.g., Aetna, Cigna), ~75% coverage of indicated procedures, CMS TEAMS model and outpatient shifts to support use cases .
• SUSTOL plan: Wind-down over next 12 months with potential reintroduction around late 2027 pending updates; manage transition responsibly .

Estimates Context

Values marked with an asterisk are retrieved from S&P Global.

Implications: Consensus likely to edge up Acute Care trajectories but adjust for margin headwinds and the debt extinguishment impact; near-term EPS expectations may remain conservative given SG&A investments and product mix .

Key Takeaways for Investors

• Acute Care is now a clear growth engine: ZYNRELEF and APONVIE showed strong YoY gains with operational KPIs inflecting; weekly units in late Sep–Oct hit highs, supported by VAN, J-code, and focused sales execution .
• Reimbursement clarity is a catalyst: The permanent ZYNRELEF J-code and growing NOPAIN Act adoption (including commercial payers) should reduce friction in billing and expand access into outpatient settings .
• Oncology remains a cash-generating anchor: CINVANTI continues to hold, mitigating Acute Care ramp volatility; watch competitive pricing pressure and potential cross-pull from APONVIE hospital relationships .
• Margin watch: Near-term gross margin impacted by reserves/write-offs and supplier mix; excluding one-time items, underlying GM appears consistent with prior quarters—monitor cost mix and inventory discipline .
• Balance sheet flexibility improved: Cash/ST investments of $55.5M; capital transactions added $13.1M; debt extinguishment cleans up the structure despite the one-time P&L hit .
• FY25 guide intact: Net revenue $153–$163M and Adjusted EBITDA $9–$13M reiterated; anchor to press release figures amidst call-range inconsistency; Q4 execution and policy tailwinds are key to hitting the upper half .
• Trading setup: Near-term narrative hinges on Acute Care demand trend sustainability and reimbursement tailwinds; any further evidence of October step-up persistence and acceleration of APONVIE adoption could be stock-positive, while margin surprises or policy setbacks could pressure the shares .